KNDS Caught in a Tug-of-War Over Production and Paperwork Ahead of Dual Listing

Franco-German tank maker KNDS races against time to secure PwC audit sign-off for its €18-20bn IPO, while weighing factory deals and ownership negotiations amid record order backlog.

The countdown to one of Europe’s most anticipated defence IPOs is turning into a race against time — and against an empty factory floor. KNDS, the Franco-German tank maker behind the Leopard and Boxer vehicles, is days away from a critical make-or-break moment. Without a signed audit certificate from PwC by the end of May, the planned dual listing in Paris and Frankfurt could slip from summer to autumn — or even further.

At the heart of the delay is a legal review of a 2013 contract with Qatar worth billions. PwC has withheld its sign-off on KNDS’s 2025 accounts until that internal investigation concludes. Chief executive Jean-Paul Alary insists the target still stands, but the window is narrowing. Banks advising on the float have already trimmed their valuation range to €18-20bn, a discount to rival Rheinmetall. The group’s order backlog, however, tells a different story — it has swelled to a record €23bn.

Even if the audit hurdle is cleared, KNDS has another pressing problem: it needs somewhere to build the tanks it has sold. The company has been in talks with Mercedes-Benz over its factory in Ludwigsfelde, near Berlin, where Sprinter chassis are currently assembled. KNDS is weighing a purchase or lease and has pencilled in investments of around €1bn at the site. The plan dovetails with a potential Bundeswehr order for 3,000 Boxer wheeled armoured vehicles. Mercedes chief Ola Källenius has signalled openness but insists defence work would remain a small niche for the carmaker.

Should the Ludwigsfelde deal fall through, KNDS is eyeing an alternative: the Volkswagen plant in Osnabrück, where auto production is due to stop in 2027. But competition is fierce. Israeli defence group Rafael has already signed a preliminary agreement for that facility. KNDS is also in parallel discussions with other industrial partners, all while trying to secure enough capacity to turn its record backlog into delivered hardware.

Meanwhile, the ownership structure remains unsettled. KNDS is currently split evenly between the French state and Germany’s Wegmann family. The family wants out, and Berlin has tabled a formal offer for a 30-40% stake. Yet the governing coalition in Germany is divided over the exact price and terms. Complicating matters further, the Czech defence group CSG has lobbied the family with an all-cash bid. Analysts at Jefferies consider the Czech approach a long shot given the strategic importance KNDS holds for both Paris and Berlin — but it adds another variable to an already crowded chessboard.

Political pressure is also building. NATO Secretary General Mark Rutte has called for a steep ramp-up in military readiness, especially in air defence and long-range missiles. He is due to meet Europe’s top defence executives in Brussels next week, and the signals from that gathering will directly shape KNDS’s order pipeline. The broader industry is consolidating, too: in March, Italy’s Leonardo completed its €1.7bn takeover of Iveco Defence Vehicles.

What happens in the coming weeks will set the tempo for KNDS’s market debut — and for its ability to scale production fast enough to satisfy a hungry customer base. The audit certificate is the immediate gatekeeper, but the factory floor and the negotiating table are just as critical. With a Czech bid, a state shareholding dispute, and a Mercedes factory all hanging in the balance, KNDS is learning that going public is only half the battle.